| China's private sector has been growing rapidly since the economic reform began and become important part in the national economy. Private medicine industry, which is characterized by low costs, high value-added, high growth rate, high risk with high ROI, has also been developing at a stunning speed during the past decade. Currently there are more than 200 medicine producers in Sichuan province and about 100 in the city of Chengdu alone, among 70% are privately owned. Some of them have sound decisions and regulated operations, resulting in a stable growth while others prefer over extensive expansion resulting in a dilemma not fit with their internal strengths. Moreover, some producers make poor quality products because of primitive means of production facilities, being at the brink of being driven out of business.This paper makes a thorough study of HT Chinese herb Medicine Company. Based on the author's working experiences as a Market Regulator and a Personnel Administrator, the paper conducts a complete analysis of its property rights system, organizational structure, decision-making mechanism and overall management system. By describing the development process from a small business to a relatively large company, from an extensive expansion to an intensive operation, and from the initial start-up to so called "upgrading period", this paper suggests some solutions to the problems that prevent HT Company from further growing, trying to reveal the development rule that private business follow in common.This paper is divided in five parts.The first part provides a profile of HT Company. HT Company is located in Chengdu, Sichuan Province. It had 625 workers, produces five varieties of medicine, of which three are approved by FDA of the United States. The annual productive capacity of HT is 5 billion RMB. From 1994 to 1997,HT Company experienced a rapid development period and from 1998 to 1999,it was called a stagnation period.The second part of paper begins with a summary of successful experiences of growth of HT Company during its start-up period. By analyzing the operations from 1994 to 1997,the paper identifies that following reasons contribute to the rapid development of HT Company:1.The Chinese herb Medicine market at that time was relatively large; the costs were relatively low thus resulting in a sound ROI.2.The assets of HT were owned by the proprietor, the ownership of property rights was distinct.3.The size of HT was small, and operations were flexible with an effective marketing strategy.4.Governments at all level supported HT Company, and there existed an easy environment of financing.The third part of paper contains an analysis of the reasons that led to the stagnation of HT Company. The paper believes that 1998-1999 stagnation HT suffered was caused by .1.Encouraged by the initial success, the company set too high goals and objectives. It fervently pursued the expansion of company size.2.Too many loans caused the financial control out of order, the ratio of liabilities to assets rose too high.3.The halt of developing new products made competitiveness suffer.4.An ineffective marketing strategy resulted in expenses of marketing boosting, causing the decline of income and profits.The paper holds that above four problems are only derivations, the main reason lies in the fact that a single person owns HT Company's property, and the single owner makes all the decisions. This kind of management system caused the stagnation of the company.The four part of the paper suggests the development strategy and solutions to the existing problem for HT company. The paper highlights that for HT Company to step out of its current difficult situation, the core competitive competence should be developed. The company should set up its sustainable development goal with the maximization of profits as its focus. It is necessary to translate its current property rights ownership into a corporation ownership according to requirements of the modern enterprise system,... |
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